Cream shortening and 1 cup white sugar together. Blend in beaten eggs. Combine crushed vanilla wafers and baking powder: mix into the creamed mixture alternately with milk. Stir in nuts and coconut. Pour batter into two greased and floured 8 inch round pans.
Bake at 350 degrees F (175 degrees C) for 50 to 60 minutes. Cool layers on wire racks.
In a small sauce pan, mix 1/2 cup white sugar and 1/2 cup brown sugar together well. Mix in evaporated milk and butter or margarine. Cook over medium heat to the soft ball stage, 234 - 240 degrees F (112 - 115 degrees C). Pour mixture into a mixing bowl. Stir in 1/2 teaspoon vanilla. Beat with an electric mixer on low speed until the icing is spreadable. Frost the cooled cake.